EP. 1264 DOES SUPER SUCK?

What if you could turn your confusion about superannuation into confidence? That's exactly what we're aiming to help you with in this episode. Join us as we kick off with a heartfelt celebration of Mark and Lisa's wedding anniversary before switching gears to a deep dive into the complex world of superannuation in Australia. We discuss its significant impact on first-time homebuyers and investors, revealing how Australia ended up with the fourth-largest superannuation pot globally. From its introduction by Prime Minister Paul Keating in 1992 to the gradual increase in employer contributions, we shed light on the mixed feelings many have about having their money locked away for retirement while facing immediate financial challenges. 

In the latter half, we explore the often-overlooked nuances of superannuation management. Lisa shares her candid concerns about over-reliance on super and the glaring gaps in personal financial education. We talk about the common pitfalls like juggling multiple super accounts from different jobs and the need for better self-management services. Government initiatives aimed at super fund consolidation also get a mention. Dan and Ant wrap up with an inspiring conversation about the importance of continuous learning and self-education. We encourage you to take the insights shared and make them work for you, transforming today's knowledge into tomorrow's financial security. Tune in and take control of your future!

Transcript

Speaker 1: 0:03

Super suck. We're talking about property, we're talking about our generations. And is it harder with super for first-time buyers and investors? Because it's around them stay tuned.

Speaker 2: 0:28

I'm the ringleader, so let's go. Whoa, whoa, whoa.

Speaker 1: 0:37

Good morning, Mrs Barala Good morning.

Speaker 2: 0:43

What a big time. Hi Sam Huh. Hey, how are you?

Speaker 1: 0:48

It's the wedding anniversary everyone.

Speaker 2: 0:51

Wedding anniversary for Mark.

Speaker 1: 0:54

Yeah, lisa and I have been married a very, very, very, very, very long time. I mean that's today.

Speaker 2: 1:01

Yes, it's our anniversary.

Speaker 1: 1:06

And my real estate agent wife. I asked where she wants to go for dinner and she said she's got an appraisal to go to yeah, I was like oh, that's cool. Do you want to change it? Maybe, and she's like no well, happy wife, happy life.

Speaker 2: 1:27

This is what Lisa wants to do. Then keep those good times rolling, oh well, I guess, so, I guess.

Speaker 1: 1:34

So now, the big thing on it that you blew my mind away today on our super chat that we're gonna have a talk about today, and I think super is one of those things. It's almost a little bit personal because it's your own money. You know, if someone says how much money you get in your super, you're like I'm not gonna, like that's, that's a rude question. Um, so that you hold it to your heart a little bit it's, it's your money, it's, it's your savings, it's a pot for when you get old. Um, some big things. Today we want to talk about Zanthony. The first one that you blew my mind of is we've got a new generation.

Speaker 2: 2:07

Oh my gosh, did you know that? The generation after Gen Z and I didn't even know this we're currently in the Generation Alpha, generation Alpha. What is that that is so cool?

Speaker 1: 2:22

It's very cool who thinks of these names, but um, I love that. So anyone born in what year?

Speaker 2: 2:29

2015 to 2030 will be part of what is going to be referred to as the generation alpha that is cool.

Speaker 1: 2:42

That is very, very cool. That is very, very cool. So little babies out there, little alpha babies currently so superannuation, serious stuff have the most amazing amount of super compared to any country in the world. What people don't know is the Australian super is ranked fourth in the world as in. The. Pot of cash of super is Number three in the world as in its. We're only point four of the population, less than one percent of the population of the world, but our pot of cash of super is four in the world that's massive, so that's globally.

Speaker 2: 3:34

Every single country is this? Everybody else that does something relatively similar to super as well everyone, 180 odd countries.

Speaker 1: 3:44

We are number four, the fourth biggest pot of super in the world. We're only like what? 30 million people do you know?

Speaker 2: 3:54

it's something for my whole working career. Super has always just been something in the background that part of your paycheck goes towards. It's something that I've yeah, it's always been part of my working career and it's just something that sits in the background. I honestly don't even really know how much I have in my super, because it's money that I can't access. I just pay towards week in, week out and it's just sitting there as part of this massive pot of money number four in the world globally that I can't do anything with.

Speaker 1: 4:30

It's like tickets on a bull.

Speaker 2: 4:35

Absolutely and does it suck? Well, I suppose part of my mind I'm kind of torn. Part of my mind thinks, yes, it's nice to have that little cash kitty in the background that's growing and growing as part of my retirement. Although if you think, project it into the next 20 or so years, when I do eventually retire, the cost of living is it just going to keep increasing. Will I even have enough then? So yeah, part of my mind thinks it is a good thing. But then I'm torn because I've got all of this money sitting there that I can't do anything with. I'm paying week in, week out. I can't afford to buy a property by myself in today's market. I can't afford to do these amazing things that I would love to do with my life and treat my friends, treat my family, treat those that I hold dear to my heart. And why can't I access this money that's technically mine?

Speaker 1: 5:28

Well, when?

Speaker 2: 5:30

it was introduced in. Have a guess when it was introduced 1991.

Speaker 1: 5:38

How did you do that? 92.

Speaker 2: 5:40

Stop that Really good guess. Yeah, yeah, well done, well done. Did you cheat I? I didn't.

Speaker 1: 5:49

I actually had no idea, that was just a really good guess who was in, who is in, who was their politician at the time? Who was the Prime Minister introduced it? You've been.

Speaker 2: 6:02

Was I right.

Speaker 1: 6:04

You were Again. No, bullshit, you looked it up. No, you looked it up.

Speaker 2: 6:09

I just know Australian politics and history like the back of my hand.

Speaker 1: 6:14

So when it was introduced it was not a lot of money. It was introduced that it was going to come from the employer. And now super, if you don't know, is being trimmed at 10.25% of earnings. 10.25% of your earnings is being hived away into your super. That's moving to 12% over the next year or two and then it's finally going to make it to 15%.

Speaker 2: 6:46

When.

Speaker 1: 6:49

I think it's 20, I'm not sure. I'm not sure, but 15% of your wage is going towards your retirement like shit, and it's already now. To give you an idea, guys, how big this is and why we've chosen to talk about this today and harp on about this is not only is this the biggest, the fourth biggest pot of cash in the world for retirement funds we're number one per capita, by the way. So our, our retirement should be pretty cushy, according to this. Guess how big that number is in terms of trillions of dollars? You've been cheating.

Speaker 2: 7:32

But it is an astronomical number, ready for your mind to be blown. I'm doing a drum roll for mark.

Speaker 1: 7:39

Okay, so a Strange cat. Australian stock market capitalised circa $3 trillion. That's the size of the stock market. The size of the property market $10 trillion. The size of mortgage debt in the country $2.8 trillion. They're your three big high-level number. How much super cash do we have? $3.5 trillion. Our super is bigger than our Australian stock market. Our super is bigger than our debt level. Wow.

Speaker 2: 8:20

Bang. That's a massive number, and what's it doing there?

Speaker 1: 8:25

It's just sitting there. So if we're talking about 1995 and you start work when you're 18, Generation X were probably the first people to start hiving away a full super attache from when they started working.

Speaker 2: 8:48

Yep.

Speaker 1: 8:50

So Generation Baby Booners, the silent generation, no, no. Generation, the alpha generation when they start working they're going to have massive super because they're going to be like paying 15% for the whole time. Generation Z's got a nice little pot, millennial's got a nice little pot and generation X has got a nice little pot as well.

Speaker 2: 9:14

They've been saving towards super yeah, what is it doing in the background?

Speaker 1: 9:22

not a whole lot, it's well, it's, for a lot of people it's half pregnant, so it's not enough to go to turn to convert to a self-managed super and go and buy a property. So most of it is that you know, 100 grand, 80 grand, 30 grand, 150 grand, people have sat it into our investments, stock market stuff like that. But it's now getting to such a massive amount per person the people are going oh shit, this thing's big. If I join this with my wife or my husband, or if I join this with my kids and have a self-managed like this is a monster.

Speaker 2: 10:02

Yeah.

Speaker 1: 10:03

But there's a negative effect.

Speaker 2: 10:07

Okay, what's the negative effect? If you were to consolidate your supers with your family, your wife, your spouse, whatever it is and your children. Move it to a consolidated, self-managed super fund. What are the negative effects of doing that? Because in my mind that just ticks a lot of the boxes and it sounds like it's a really good solution it's pretty good.

Speaker 1: 10:30

Look, we're not giving financial advice, we're just telling you what we're seeing out there in the property market. But yeah, people joining together. They're thinking you know, I can too much alone, I'll join it with Family or friends. I think that you can have up to eight or nine people do it In one, in one thing. So I guess you can go buy units and houses and factories and whatever we know self-management, my stocks, I guess. But the negative effect stands is what people haven't realized is it's made it harder for first-time buyers. And because that if well, okay, let's put it this way um, how much would a typical person save of their wage as in in the bank? So say someone earns let's just use the number 80 grand. How of that 80 grand, right, living, rent, that that love? How much do you put in your bankers savings at the end of a year?

Speaker 2: 11:28

typical Australian we're going to try. I'd say maybe 20 or 30 percent, 16 grand.

Speaker 1: 11:37

All right, so away you can get rid of more than half of that because that's what Super's done. So it took away that ability Like I don't care how people slice and dice it, oh, your employer's going to pay it At the end of the day. It hit the bottom line on the balance sheet, so that money would have gone probably to the employee, I guess, or employer, anyway it it would have. It's changed the world. So my point is that there's it's much harder to save when you're getting 10 or 12% trimmed off from your super or 15% trimmed off your super to save to live or what you're saying, to enjoy, you know, to buy a property or whatever, because when you're young you're reinvesting that money. Yeah, and that's been, half of that's been taken. Look, I don't think and I'm not, I'm not bagging super at all, but I think it's. It's the elephant in the room no one wants to talk about I agree and you're not wrong.

Speaker 2: 12:39

It certainly does affect first home buyers specifically, like they are hit really hard. It's hard to say for anything at the moment. I'm feeling it as well out there with everybody. It's just tough the struggle, and would I love to be able to access some of those funds in order to purchase something for myself to live in. Absolutely.

Speaker 1: 13:03

Possible. And for newbies out there, if you don't know, we're actually witnessing people that are borrowing money within their super as well. And what I thought what freaked me out as a talk we did the other night in the office was if you have a loan in your super say, you've got 200 grand and your super borrows 400 grand, um, that doesn't affect any of your home loan, um stuff that you do. It's completely partitioned away your super from your normal lending activities.

Speaker 2: 13:33

Didn't know that it's actually really interesting and it's kind of what spiked this whole topic of talking about super the fact that, yes, you can access it for various investments. You just need to be clever about it and kind of know exactly what it is that you're doing.

Speaker 1: 13:54

And I guess today was more about what we're not giving financial advice. Today was more about we're just observing what's happening in the marketplace with what we're seeing with super, and it's hard information to find. Do you know what I mean? So we put it out there because we see people consistently doing it with buying property and talking about it. So, yeah, hopefully this helps some people today.

Speaker 2: 14:19

And then we've got a couple of comments as well before we wrap up. Mark loves super, says Lisa.

Speaker 1: 14:31

Not too much, though. I wouldn't have all my stuff in super. It's a bit scary.

Speaker 2: 14:36

If you had your money in the bank and every time you checked your balance it was less, you'd kick and scream. Why are you letting this be done to your super guys? Many super funds are losing you money.

Speaker 1: 14:48

Manage it yourself oh my god, she's a great, very aggressive this and it's a wedding anniversary and she's so aggressive.

Speaker 2: 15:02

I was kind of touching on. I honestly don't even know how much money I have in my super. It's not something that I check every day, whereas with your day-to-day bank account, you are accessing those funds day in, day out. You need to know what your balance is looking like so you can make those everyday transactions and then put some money into your savings on a week-by-week basis or whatever your scenario is, because super is just sitting in the background of your mind. It's not something that you access every single day. You don't actually know what's happening with it. You'll get your end of year statement, whatever it looks like, and of course it's just going to say, oh yeah, tiny growth. You don't see the up and down wave that it's gone through with whoever is investing your super money. And then someone should start up a company. Someone should start up a company called Superheroes and hold people's hand through self-managed super stuff. People are confused and overwhelmed. It's confusing.

Speaker 2: 16:08

It's not like when really focused on money well, it's not like when you start your super. So, like I said, it's something that I just always had to pay my whole working career. It's not like anybody sits you down and says okay, here's an explanation of super.

Speaker 2: 16:22

This is what it's going to do. This is how we manage it, this is how we handle it. This is what you know. You don't ever get that holistic explanation. It's just your employer or your parents saying yep, we need to pay a portion of your weekly wage into super that you can access for your retirement fund well, there's no interest when it's such a small amount of money yeah so you know who's going to hold the hand, and of superannuation company to do that or it.

Speaker 1: 17:00

So it's sort of it's like you don't get educated at all.

Speaker 2: 17:04

You're right and I think when I first started I had about three different super accounts as well. One was with whatever retail employer I was with, one was with a hospitality employer I was with, and then I had another one. So I had all of these supers in the background that I didn't know. You had to consolidate as well.

Speaker 1: 17:27

Yeah, so that's probably the biggest thing out of today, I think. Because there's that lack of information out there for newbies on super and lack of money for anyone to educate these newbies, they end up just setting getting a job set up an account, get a job set up an account to get a job set up account. And there's a ton in australian super floating around that people um have just not taking ownership of and that's that's weird money something that speaks about or even explains to you.

Speaker 1: 18:00

Yeah, yeah, but there is some websites. I've seen some government do some campaigning on check if there's super there for you. You just put your name into our government website, blah, blah, blah, so you can go out and see if there's anybody sitting around there for you. And again, just to backtrack, the way that happens is you had a job when you were 18 to 20 and then you had another job at 20 to 22, another job from 22 to 26. You set up three different supers. You get 10 years down the track and you sort of forget about going back on those other supers and checking. But there could be money there yeah.

Speaker 1: 18:37

Dan, that super talk. We could have talked all day we could have for sure.

Speaker 2: 18:43

Does it suck? I don't know. I'll leave that to the panel of judges out there to make up their own mind.

Speaker 1: 18:49

Leave it out there. Do you know what? Make it work for you. That's all I'm going to say. Educate yourself and make it work for you. Thanks, ant. Cheers everyone. Bye.